Partners Find Ties No Longer Bind

February 04, 1991|By Laurie Cohen.

The push is on at KPMG Peat Marwick.

This week, Peat, one of the nation`s top four accounting firms, plans to ax about one in seven of its U.S. partners. To escape the purge, nervous partners who want to appear irreplaceable have been scrambling to cement ties with clients.

``I`ve seen (my Peat audit partner) three times in the last two weeks,``

compared with at most once a quarter previously, said the financial vice president of an East Coast health-care concern. ``It`s extraordinary. They were clearly told to get out there and be productive.``

The Peat cuts are the clearest evidence to date of a profound change in the meaning of partnership at professional service firms.

Traditionally, making partner at a major accounting or law firm has been viewed as a promise of a comfortable lifetime post, akin to tenure at a university. But now the aura of collegiality at many firms is being buried under a pile of pink slips.

``A law partnership is day labor,`` said a former partner at a major Chicago-based law firm who was forced to quit last year after work in his field dried up. ``You can never count on partners to be true partners anymore.``

``Partnership used to be a lifetime proposition,`` agreed a former Chicago consulting partner at a Big Six accounting firm who lost his job last fall because he wasn`t bringing in enough new business. ``It`s ended up being based very much on a year-to-year sales quota.``

Experts attribute the change to intense competition and slowing revenue growth, particularly in key businesses such as mergers and acquisitions and real estate, after years of rapid personnel expansion. Profit-squeezed corporations are doing more routine legal and accounting work in-house and cutting back on consulting projects that fueled accounting firms` rapid growth in the last few years.

Many applaud the increased attention to the bottom line-or at least view it as inevitable.

``American business got fat and happy after World War II, including accounting,`` said Jerome Harris, managing partner at the Chicago accounting firm of Checkers Simon & Rosner. Being a partner ``was a men`s fraternity. If a partnership was making money, rather than making waves they`d probably let you sleep on the job.``

``I don`t think there`s a law firm or accounting firm that hasn`t agonized about this,`` said Leslie Corwin, a partnership specialist at the New York law firm of Morrison Cohen Singer & Weinstein. ``Some firms haven`t survived because they`ve been too nice to partners. They were afraid to cut them loose.``

Large partnerships, simply by virtue of their size, must be run like corporations rather than as confederations of equals, many management experts believe.

``There are just as many people to report to, just as many people deciding how much money you`re going to make,`` said Edward Kazemek, chairman of the Chicago consulting firm Accord Ltd.

But some observers decry widespread cuts, saying they represent at best excessive attention to short-term results and at worst downright greed by remaining partners, who are left with a bigger share of the pie.

``These dismissals (of partners and associates) are rapidly eroding the

(legal) profession`s traditional values and standards,`` Judge Irving Kaufman of the 2nd U.S. Circuit Court of Appeals wrote recently in the New York Times. Kaufman noted that many partners at the top-grossing U.S. law firms reportedly earned more than $1 million each last year.

The dismissed Chicago lawyer put it more bluntly: ``We`re simply talking greed. We`re talking about guys who really panicked, who have big bills and don`t have the money coming in that they did three or four years ago.``

What`s clear is that more and more lawyers and accountants who put in long hours and battled long odds in exchange for the security of making partner now believe they have nothing to show for their efforts.

``Wonderful lawyers who followed all the rules have had the game changed radically,`` said New York recruiter Carol Kanarek.

``That`s the sadness of this thing: people caught in a changing situation instead of a fundamentally bad one,`` said John Burton, accounting professor at Columbia University Graduate School of Business.

Unlike in the past, partners must be supersalesmen as well as technical experts. ``A lot of people became professionals because competition made them uncomfortable,`` said Richard Measelle, head of the Arthur Andersen unit of the Chicago-based accounting and consulting firm of Arthur Andersen & Co., S.C. But ``in the old days, business was walking in the door.``

A displaced Chicago accounting partner said his Big Six firm set a billings goal of between $1.5 million and $2 million a year.